Raghuram Rajan wants ‘bullet-proof’ shield for India against US Fed

RBI repo rate hike: Raghuram Rajan wants to be India’s Paul Volcker,fight inflation,hit by recession

Rajan said this during a press conference post RBI’s mid-quarter policy review here.

The US Federal Reserve Wednesday decided against tapering its monetary stimulus under which it has been buying assets worth USD 85 billion every month.

The decision has a positive impact on Indian stock markets as well as the Indian rupee.

Raghuram Rajan’s RBI effects 25 bps repo rate hike,turns EMIs on loans dearer

In view of the Fed’s crucial meeting on Wednesday,Rajan had postponed the mid-quarter policy announcement from September 18.

“I do think,short-term,it (tapering) has in a sense postponed some of the concerns. My sense is that the markets were quite prepared for a moderate tapering. And,what this has done is,in a sense,it has again created the possibility of uncertainty down the line,” the Governor said.

He stressed the need on improving the economic parameters regardless of what the US does so that “we are better prepared for the tapering whenever it happens”.

After a possible indication of tapering by US Fed in May,Indian stocks and Indian rupee had plunged on of large scale capital outflows.

Meanwhile in New Delhi,Planning Commission Deputy Chairman Montek Singh Ahluwalia too said India needs to ready itself to deal with tapering.

“They (US Fed) are going to do it. They are going to do it in a phased manner. We should be ready for this happening over a period of time,” said.